Circular Economy Hero Image
Circular Economy Hero Image

The Circular Dance

Oil & Gas industry puts a new spin on sustainability

If you were to ask a man on the street what he associates with the oil and gas industry, images of oil derricks, massive tankers, and petrol pumps are likely points of reference. While it’s viewed by some as a smokestack industry steeped in the past—don’t be mistaken—the oil and gas sector is taking bold strides into the future, dancing to the rhythm of the circular economy. 

So what’s the buzz about the circular economy? At its core, it’s an economic model that seeks to keep resources in a continuous loop of use, reuse, and recycling. A circular economy minimizes the number of materials incinerated or sent to a landfill by incorporating other methodologies, such as:

  • Reusing
  • Repairing
  • Refurbishing
  • Remanufacturing
  • Recycling

Instead of the linear ‘produce-use-discard’ approach, the spotlight is now on ‘produce-use-recycle-reuse,’ and it’s illuminating opportunities for industries worldwide.

As the only national trade association that represents all aspects of America's oil and natural gas industry, the American Petroleum Institute (API) is at the forefront of this shift, declaring: “Our commitment is to drive sustainable practices that reduce waste and increase resource efficiency. API and its member companies are dedicated to our responsibility as corporate citizens to minimizing the impacts of energy production, transportation, and use; to improving environmental performance; and to protecting human health and aquatic life.”1

The broader implications for the industry are shifting the focus beyond extraction of energy resources, but also ensuring that products have a life even after their initial use. A top priority is reducing hydrocarbons, which are the chief components in petroleum and natural gas.

What’s behind the pivot to circularity? A report by the Ellen MacArthur Foundation found that a circular approach could bring significant economic benefits, on top of the evident environmental ones.2 Collaboration with suppliers, customers and infrastructure is the only way to build a system which benefits business and the whole of society.

As one of the largest global industries, the oil and gas sector seeks to capitalize on the dual potential of economic and environmental benefits. Innovative practices in the circular economy can foster economic growth while ensuring environmental stewardship, industry analysts say.

This perspective is echoed globally. The International Energy Agency (IEA), has pointed out that while the shift to renewable energy is vital, the potential in improving resource efficiency within existing industries like oil and gas is considerable.3

The oil and gas industry will be critical for some key capital-intensive clean energy technologies to reach maturity. The resources and skills of the industry can play a central role in helping to tackle emissions from some of the hardest-to-abate sectors. This includes the development of carbon capture storage and utilization (CCUS), low-carbon hydrogen, biofuels, and offshore wind. Scaling up these technologies and bringing down their costs will rely on large-scale engineering and project management capabilities, qualities that are a good match to those of large oil and gas companies.

Beyond the refining processes and direct products, there’s an increasing push to innovate. Companies are investing in technologies to transform waste materials into valuable resources. Some refineries are converting waste CO2 into usable fuels and chemicals. There are also collaborative efforts with other industries, such as plastics, to ensure that products have a longer life and end-of-life solutions.

 

Cat® Reman

 

While emissions reduction is the primary focus for oil and gas companies as they strive to attain their sustainability goals, resource conservation is an area that’s starting to get more attention in discussions about sustainability.

Cat® remanufactured components provide like-new performance and reliability at fraction of the cost of manufacturing new equipment, while reducing impact on the environment. 4 Cat Reman got its start in the truck engine business in the 1970s, and quickly grew to support customers in construction and mining as well.

Today, there are about 8,000 different types of Cat Reman products available across various industries. For oil and gas equipment, that includes Cat Reman transmissions as well as a number of major components for both diesel and gas engines—turbochargers, cylinder blocks, cylinder heads, fuel injectors, oil coolers, oil pumps, pistons, rocker arms and more.

Cat Reman delivers like-new performance at a fraction of the cost of new when the end-of-life-core is returned—plus, less raw materials and energy are used compared to the manufacture of new parts.

Take the case of an existing engine, and consider how much material went into producing it. Iron is melted down in a foundry, poured into a cast and cooled with water to make the block, which goes through a series of manufacturing and machining processes to create the final product.

If the engine is scrapped, all the material and energy that went into making it are lost. If you return that engine block to a Cat dealer and accept a Cat Reman product in return, you’re choosing a repair option that offers sustainable benefits.4

 

Conclusion

 

Transitioning to a circular model isn’t without challenges. Infrastructure, technology, and investment are required. The oil and gas industry has repeatedly demonstrated its capacity to innovate and reinvent itself, and the circular economy could be its next frontier.

So, the next time you’re at a gas station or come across a petroleum-based product, think of it not as a one-off item but as a part of a vast, interconnected circle. The oil and gas industry, with its deep roots and vast reach, is uniquely positioned to champion the circular economy. And from the looks of it, it’s embracing the challenge by seeking ways to reduce waste and make the sector more sustainable.

In the final analysis, the industry’s dance with sustainability is far from a slow waltz—it’s a dynamic jig, and the tune is promising.

To learn more, tune in to a two-part Energy Pipeline podcast with Peter Evans, PhD & Chief Strategy Officer at McFadyen Digital, on the topic of the Circular Economy in the oil and gas sector. (Episodes 15 & 16)

 

1 American Petroleum Institute. www.api.org/news-policy-and-issues/sustainability/environmental.
2 Ellen MacArthur Foundation. “The Circular Economy.”
3 International Energy Agency (IEA). “The Oil and Gas Industry in Energy Transitions, World Energy Outlook special report.” January 2020.
4 Represents U.S. environmental impacts comparing "gate-to-gate" remanufacturing and manufacturing processes for engines and components. Based on 2018 external study of Cat engines, alternators and turbochargers. Does not include impacts elsewhere in our value chain. Caterpillar Inc., 2022 Sustainability Report.

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